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What do I need in order to issue a 1099 to people that contract with my small business?

I am starting a sole proprietorship and will have other people that will I will be getting work for. They will be paid using 1099. What government forms or ID numbers do I need to be able to do this?

Public Comments

1. Federal tax ID # and their address and business name. I think that's all.
2. send them a w-9 that they need to return to you. it's requesting their taxpayer identification number and certificate. keep it on file.
3. The only form you are required to have on file from each worker is Form W-9. On this form, the workers will give you their full legal name, SSN/Tax ID #, and address. To obtain a copy of this form, visit http://www.irs.gov/pub/irs-pdf/fw9.pdf. In addition to the question you asked, I wanted to offer one piece of advice…setup an S-Corporation. As a sole proprietor, your risk of getting pulled for a random IRS audit will be sky-high…add that to the audit risk involved with issuing more 1099s than W-2s (independent contractors vs. employees) and you are in a very high risk category. Something as simple as setting up an S Corp will make you nine times less likely to be audited. Additionally, operating your business as an S Corp instead of as a sole proprietorship will save you a great deal in taxes (as much as $8,000 each year) and will protect your personal assets from any business-related lawsuits. Depending on what state you live in, setting up a corporation will cost anywhere between $200 & $400…a small price to pay in order save thousands each year in taxes, protect your personal assets, and sleep at night. Michael T. Hanley, CPA is the Managing Partner of the Smithtown, NY CPA Firm, Merl & Hanley, LLP and the author of Effective Tax Planning for the MicroBusiness.